new car advice

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sbu22

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hi all. I once sought advice on which car to purchase on this forum and got great feedback. I,ve finally decided on the c class coupe which retails for 400k.

I have 200k in cash and will have the other 200k in 4 months. If i wait till march next year, according to the the dealer, the purchase price will be up to about 440k.

The think is, i need the wheels now. I took a taxi today just to see how my life would be if i were to use public transport for the next 4 months. I swear i nearly pissed myself. Im not a religious person but i found myself praying the entire journey and thanked god when i finally jumped off.

I could buy another cheaper car but it wouldnt be what i want. I dontt wanna be cursing everytime i have to drive somewhere. Worst still, cry everytime i see the car that im dead set on.

I hate debt hence wanting to buy the car cash or is this unwise? Should i rather do as my friend suggests, purchase the car with the highest available residual which should be about 40% or higher if its possible and then pay-in the 200k towards the principal debt and than next year march, pay off the rest.

I got confused halfway through his explanation, maybe someone who understands the above method can break it down to me in simpler terms because i dont see how using this option saves me money or curbs the price below what i will have to pay should i wait for next year.

Please offer your solutions.



What do i do
 
May I ask how you managed to save up 200K cash? You don't have to answer it :)

I personally am starting out with a 9K car.

Have you also thought about looking into a second hand car? Perhaps also a demo model, or a repossed one?
They come at a much cheaper price
Just my 2C :)
 
If you're fine with getting a new car every few years, residual is fine (can't believe I just said that). Just keep in mind that you have to pay the residual with the final instalment on the car. If you're planning on hanging onto the car for a while, pay a R200k deposit and finance the balance. You'll build up a credit record.
 
2 cents

1st, congrats on saving 200k
2nd, getting a new Mercedes C-class will cost you now, cost you later and will cost you in maintanence. It's an expensive brand to own and maintain.
3rd, check with Merc to see if there are running any subsidised / specials on leasing / financing.

Enjoy
 
@ zizo. 9k car? Took me a long time to save up the cash, a very long time.

I dont want to buy second hand, too many horror stories from friends and family dealing with second car dealerships.

If i finance the car over 60 months as my friend says with the highest possible residual of say 40% and then after the first month of instalment pay-in the 200k towards the financed portion and then come march payoff the rest thereby cutting the finance term to 5 months. Would this work?. Does one incur penalties on early settlement of car finance?

Something sounds a miss with my friends solution. Can someone please shed some light on the situation.
 
@ zizo. 9k car? Took me a long time to save up the cash, a very long time.

I dont want to buy second hand, too many horror stories from friends and family dealing with second car dealerships.

If i finance the car over 60 months as my friend says with the highest possible residual of say 40% and then after the first month of instalment pay-in the 200k towards the financed portion and then come march payoff the rest thereby cutting the finance term to 5 months. Would this work?. Does one incur penalties on early settlement of car finance?

Something sounds a miss with my friends solution. Can someone please shed some light on his suggestion. Dows it have merit or is it just bollocks?
 
Why would you want to finance R400k and then after the first month only pay R200k, to me that makes no sense.

Rather pay a R200k deposit and finance R200k.

But frankly i think you are mad :p if it were me I would go buy a R200k car like the Kia cerato, especially since it sounds like you have no car at the moment.

Also the cash you are coming into in march, what being released from an investment account thus the wait? If so have you checked what penalties apply if you take it out early?
 
hi sbu22. Congrats on saving up that cash. A piece of advice, please be cautious. A car is a depreciating asset. Essentially you are throwing cash down the drain for the enjoyment of owning a luxury vehicle. We are all guilty of this, but it has to be balanced with affordability. I hope you do not intend to use all your savings as a deposit on a depreciating asset. if you have other savings and you can afford it, fair enough but consider the possibility of buying a car for less and putting the rest into an investment for the future.
 
@ Dx3. the suggestion was made to me by a friend and i too was puzzled by it. If you read my first post, i mention this fact.

I dont want any korean, chinese, japanese or any other oriental car manufactures, no offence. It was either the merc, bmw or audi. After test driving the audi and the merc because at the time of the test drives i was owning a 320d, the choice was clear, to me the merc won hands down.

my bmw was great to drive but i was sick of running into look alike at every corner plus it was over 100k on the clock so i got rid of it before it started choking and costing me money.
 
@ carbon, thanks for the advice bud. Its not my entire savings so no worries there. The thing is that, i need a car no just to move from point a to point b but also to close deals mate.

This to some is gonna sound stereotypical and to some sensitive souls a tad racist but im black so it affects me too.

I wish at times that i did business with only white people because mostly then i will know that my proposal will be judged on merit and not what im wearing or driving to convince them that i can do the job.

But sadly thats not the case. Most of us black people are new to money so we judge a persons ability to deliver on their financial capabilities and since it wou.d be rude to ask for a persons bank statements before transaction, most black people will observe your dress code and what make of vehicle you are driving.

Thats why you see alot of black folk driving around in cars they cant afford. Maybe in time we will all do business the same way but till then, i cant be seen driving around in a picanto that would be financial suicide.
 
Wow. Sorry but what job do you have that you need a R400K car? Sales i'm guessing from your statements.

I understand how the car you drive gives the impression of if you are successful...

However, my 2c worth, if you are set on the Merc... It is a depreciating asset which means that you drive it off the showroom floor, its worth less than what you paid for it, in 2 years it will lose around 30%-40% of its value. Find out if your company can buy it for you - they get a tax write off, and you don't have to spend your own money.
If its your own company, again put it through the company, you can claim the VAT back, as well as make it an expense on the company books, instead of spending cash.
Rule is usually do not spend cash on a depreciating asset, rather invest it in stocks or property especially large amounts like that.
Remember, if you go to an investment guru with R200K now and R200K later, you will get around 12% - 15% returns on that as an investment, whereas if you go to the car dealer with a smaller deposit, take the car over 60 months with a residual, you can probably get away with paying around 7% interest on the car.
In a nutshell : you can make more profit on the cash you have now and will have later, than the cost of the payments on the car. So I would rather invest the cash, and pay the car off.
Also, to correct one of the posts above (too lazy to look who) when the end of the term is reached and you want to keep the car you DO NOT have to pay the final amount, you can easily refinance this, and pay it off, or you sell the vehicle and pay the remaining amount, or often car dealers will take the vehicle back and give you a trade in, usually higher than what you owe, you can then use that as a deposit on the next vehicle.
 
@ ozzie. Thanks for the advice mate and can i please have the details of your financial guru that can give me 12 >15% return because i swear the people i,ve spoken to were full of ***t but maybe coming from a one horse town that died a 100 years ago has something to do with it.

I was gonna start another post in the finance section about investments otpion. If i can get anything near 12% then i would fiance the deal over 60 months no problem.

Thanks again mate, i had'nt thoguht of it that way and thats why i always come onto this forum for advice, i really appreciate it.
 
sbu22 said:
@ carbon, thanks for the advice bud. Its not my entire savings so no worries there. The thing is that, i need a car no just to move from point a to point b but also to close deals mate.

This to some is gonna sound stereotypical and to some sensitive souls a tad racist but im black so it affects me too.

I wish at times that i did business with only white people because mostly then i will know that my proposal will be judged on merit and not what im wearing or driving to convince them that i can do the job.

But sadly thats not the case. Most of us black people are new to money so we judge a persons ability to deliver on their financial capabilities and since it wou.d be rude to ask for a persons bank statements before transaction, most black people will observe your dress code and what make of vehicle you are driving.

Thats why you see alot of black folk driving around in cars they cant afford. Maybe in time we will all do business the same way but till then, i cant be seen driving around in a picanto that would be financial suicide.
Click to expand...

Speechless :eek:
 
@ozziej

Curious aren't tax incentives only on single cab bakkies now?

Also 12-15% interest? And if so over what kind of term?
 
1) Buy a cheap 2nd hand car of R60 000 and drive it for four months. Sell it when you have enough for the Merc.
2) Get a loan for R200 000 from the bank, buy the Merc and when the rest of the money comes in pay off the loan.
 
I'd also like to see that 12-15%. It's pretty difficult to get rates like that without a pretty good amount of risk going along with it.
With that being said, also keep in mind that your money is effectively worth 5% or so less, in a year, thanks to inflation, so deferring payment till later is good in that aspect as well.
 
Why not put down the 200k as deposit now, finance over 60 months, then have a payment of about 4k per month until you can settle the vehicle.

Why are some of the other posters trying to convince the OP not to buy the vehicle? He asked for advice with regards to financing options and not whether he should buy the vehicle or not?

And yes, there are still some industries where you get judged by the vehicle you drive.
 
sbu22 said:
hi all. I once sought advice on which car to purchase on this forum and got great feedback. I,ve finally decided on the c class coupe which retails for 400k. I have 200k in cash and will have the other 200k in 4 months. If i wait till march next year, according to the the dealer, the purchase price will be up to about 440k.
Click to expand...


Dude, with the economic forecast being so bleak, why on earth do you want to be in debt? Buy a R200K car and live debt-free!

Plenty of excellent R200K cars out there, even Mercs. In fact I have a friend who is selling a 2yr old low mileage C180K for about R189 I think.
 
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